8/17/2010 @ 12:00PM

U.S. Needs To Deal With Chavez

Oliver Stone’s recently released documentary, South of the Border, depicts Venezuela’s Hugo Chávez as an emerging South American leader striving and fighting for a “classless utopia.” It does nothing more than promote an idealized interpretation of the delusional achievements of Chávez. Tragically, this film represents a missed opportunity where the escalating injustices that have befallen the Venezuelan people–and their enterprises–could have been exposed.

Stone simply perpetuates the myth among some extreme liberals that Chávez is merely a populist, a leader who has justifiable and fair grievances about Western capitalism.

This depiction, of course, is merely the cinematic portrayal of Chávez. The non-fiction version is far more akin to Stalin. The real story of Chávez would have made for a more interesting film that would have made real impact by revealing the human rights atrocities and the asphyxiating acts of anti-capitalism under which Venezuelans struggle today.

With the States’ diplomatic interests so intensely focused on the Middle East this past decade, it’s no wonder that Chávez has risen, ever so quietly, to become a geopolitical nightmare for the United States. His close relations with Tehran, financing of the Colombian terrorist organization, the FARC and support for other Bolivarian strongmen, like the country’s president Evo Morales, risks destabilizing the entire region.

In recent months, emboldened perhaps by Washington’s turn-the-other-cheek approach to Latin America, Chávez has aggressively moved to gain absolute control of his country’s various branches of government and civil society. In February the Inter-American Commission on Human Rights issued a report about widespread human rights abuses in the country. At that time and since then, many government critics headed into exile and some prominent citizens have been tossed in jail. Not surprisingly, they are all owners of companies in key industrial sectors in Venezuela.

Chávez’s appetite for private-sector takeovers has been swift and efficient, reminiscent of how Putin’s Kremlin stepped in to quickly take over its oil industry by jailing the CEO of Yukos in 2003. The charges against Khodorskovsky were, of course, cooked, and the trial that ensued was a farce. But it did not matter. Moscow now has complete control over Yukos.

This scheme is playing out in real time now in Caracas. In the past seven months the government has seized more than a dozen banks, giving Chávez control over 30% of the industry. In all, Chávez has privatized companies with Venezuelas oil, mining, banking, media, and steel, cement and food sectors. It seems that Chávez, in addition to the illegal acts against his own people, also has no respect for commitments and contracts regarding international investments by private companies in his country.

The stories always unfold in some absurdly manipulated and crooked manner. For example, in June, the Venezuelan government took control of 11 oil rigs owned by U.S. firm
Helmerich & Payne
. The reason given was this company, which had been in Venezuela for 52 years, had ceased operating its rigs. In reality, Helmerich & Payne had stopped operating its rigs because Venezuela’s state-run oil company, PDVSA, owed the company more than $100 million. This was a setup.

President and CEO Hans Helmerich said in a statement after the takeover, “We simply wanted to be paid for work already performed. We stated repeatedly we wanted to return to work, just not for free!”

Turning back to the bigger picture; the situation is escalating dangerously. The takeover of these key industries is giving Chávez total and complete power–to the point where he can decide if the people of his country eat or starve. But given the sour economic mood here in the U.S. and the general populaces apathy toward “big business,” it is no surprise that the Venezuelan victims of Chávez’s crackdown are getting much less international press than the more widely reported conflicts with foreign businesses struggling to operate in Venezuela. Even those situations are going almost completely unnoticed and certainly, foreign governments, including our own, have failed to step in and intervene in any meaningful way.

This is not a situation unique to the energy sector.
Verizon Communications
was on the receiving end of a Chavez shakedown in 2007 when Chavez bought out the Verizon stake in Venezuelan telecommunications carrier CANTV at a price far below what most analysts deemed reasonable.

The most visible case concerns Guillermo Zuloaga, the main shareholder of Globovisión, and his partner, Nelson Mezerhane. Together, they own the last independent television station in Venezuela: a 24-hour television news network known as the opposition television network. In March 2010 Zuloaga was arrested for remarks that he allegedly made during an Inter American Press Association meeting in Aruba regarding the Venezuelan government’s restrictions on freedom of expression. Zuloaga was released soon after, but banned from leaving the country.

In May Chávez ordered Zuloaga’s arrest again, this time on “criminal charges that he and his son had illegally stored 24 new
Toyota
vehicles in their garage in order to manipulate prices.” Zuloaga, who does in fact own a Toyota dealership, was able to flee the country and may seek asylum in the U.S. Chávez now claims that the state owns 25.8% of the shares of Globovisión because they belonged to Mezerhane, who owned a bank that the government took over.

The other involves Ricardo Fernandez Barrueco, whose case most resembles that of Yuko’s fallen CEO. His firm, PROAPERA, stepped in to service the country’s feed-the-poor program during a national strike in 2002. In 2009, when the government fell behind in its payments and racked up a $1 billion debt with PROAPERA, Barrueco transitioned into the banking sector with the approval of Venezuela’s Superintendency of Banking.

A few months later, during yet another wave of nationalization, Chávez seized several banks, including those owned by Barrueco and threw him in jail. The government also seized PROAPERA and handed the keys over to Venezuela’s Socialist’s Production Unit.

Barrueco sat for nearly a year in a military prison before he was charged in July with various banking violations. In the interim, rampant accusations from anonymous sources and several of Venezuela’s “unofficial blogs” attempted to vilify Barrueco in public.

The fate of another targeted businessman, Lorenzo Mendoza, President of Empresas Polar SA, is also on the line. Chávez is trying to put another nail in the coffin of private industry by going after the rest of the countrys food supply. In fact, the state has already nationalized much of it–an issue that has been under scrutiny due to food shortages coinciding with food spoiling in state-owned ports and warehouses.

After some criticism from business chambers, Chávez turned his attention to Mendoza’s company, the country’s largest food supplier. Chávez has threatened to nationalize all of Polar–a company with 30,000 workers, 14 plants and 75 distribution centers. Until now, Chávez has only moved against Polar’s warehouses in Barquisimeto.

Chávez publicly asked who would last longer, referring to himself versus Mendoza and declared an “economic war” on the “bourgeoisie.” He personally called out Mendoza declaring, “war is war, my friend. Dont come complain to me later.” Chávez threatened Empresas Polar, claiming the company is not indispensable and he had the power to nationalize any company, perhaps still reeling from Polar’s refusal to intervene during the national strike of 2002. After seeing what happened to Barrueco and Zuloaga, I see the writing on the wall.

The jailing of wealthy businessmen is a textbook move by textbook strongmen like Chávez and Putin. Let’s be honest, outside of the G-20, it’s how the world operates. So no one should be surprised that Mendoza is on the cusp of being deported–or worse–and his company seized, Zuloaga and Mezerhane are both in exile in the United States, and Barrueco sits in a prison cell in Caracas.

Chávez is also taking on the Catholic Church. Venezuela’s population is about 90% Roman Catholic and plays a historically important role in the country. A number of priests and bishops have been critical of Chávez’s actions and have publicly “mentioned” his great effort to control every resource of importance in the country.

Rarely has the church ever been accused of interfering or trying to seize power from a sovereign country. The Church has no reason to speak out against Chávez other than for their visceral belief that he is hurting the people of Venezuela.

The major target in this battle is Cardinal Jorge Urosa–maybe the last person left in the country that is allowed to say anything negative about Chávez; but not without retaliation. Chávez went on a televised rant about Urosa on July 5, the countrys Independence Day, calling Urosa a “troglodyte.” This was in response to Urosa speaking out about the governments botched handling of the food supply, which led to 100,000 pounds of spoiled food.

Given all of this, the U.S. should be concerned when every week honest companies are having their assets stolen from them and, more importantly, when legitimate business leaders are being jailed. These moves are the final act in a political passion play that we have witnessed before. Just ask the many Cuban-Americans in Miami who saw their livelihoods and families stolen away all in the name of revolution.

Its obvious that Chávez and the Venezuelan government are well on the road to dictatorship; using the country’s resources to line the leadership’s pockets, not the pockets of its citizens. It is no coincidence that the banking industry, the media and individuals who posed any threat to Chávez’s power have all been involved in “corruption” and have been jailed or forced to flee the country. It is no coincidence that anyone critical of Chávez faces his wrath, publicly, and soon feels the consequence of speaking out, and it is no coincidence that the Catholic Church is among the maligned businessmen and politicians that have tried to oppose Chávez’s rule. Chávez has quickly turned Venezuela into a Marxist dictatorship.

Venezuela is depicted in Stone’s film as one great leader, embarking on a noble and selfless effort to create a classless utopia. The truth is that the U.S. needs to wake up and realize Chávez is creating a dictatorship that stops at nothing, crushing the opposition and destroying capitalism and private enterprise. The Obama administration is turning the other cheek and this will only result in more innocent people in prison and a dangerous tyrannical regime much too close to our border. It would be a tragedy if the Obama administration decides to sit on their hands until the Chávez threat is literally staring at us in the face.